After COVID Will People Still Move To Seattle?

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Image by David Mark from Pixabay

People moving to Washington State and the Seattle area are far more likely to be young and college educated. Kinda obvious.

But will they keep coming? Every mayor and community development director in the country is trying to figure out how migration and settlement patterns, both national and local, will shake out in the post pandemic world, and there are few solid hints so far. So as we wait for better data, some things to think about:

Best Places: do people move to them?

For decades, Washington State and the Seattle area have enjoyed top billing on lists of “best places to live,” with the state getting the No.1 rank on the 2019 U.S. News and World Report list of best states. But do these sorts of rankings drive migration? Figure 1 plots state net migration rates with the U.S. News rankings (The overall ranking is a composite of eight criteria.) Washington is the red dot.

We would expect to see a strong positive correlation between the rankings, and it turns out there is no statistically significant relationship at all. There is a moderate correlation between migration and two of the eight criteria—economy and fiscal stability—but the causation could work both ways. Economic success is as much an outcome of migration as it is a driver.

Figure 2 uses a state ranking from a paper by two economists at the Federal Reserve Board. The composite ranking includes six measures that add up to a standard of living: life expectancy, education, consumer spending, inequality, consumer prices and house prices. Washington is the red dot.

Again, we might expect to see a positive correlation between the standard of living rankings and migration rankings. Instead, we see a weak negative correlation: people migrating to places with lower living standards.

Neither of these results should surprise us. People do not think in composite terms. They have priorities, make their location decisions based on those priorities and then pay for their priorities, as required. Which brings us to:

Lifestyle: paying extra for amenities

People are willing to pay more to live in high amenity places, but how much more? In a widely cited paper, Stanford University economist Rebecca Diamond created a model to estimate how much highly educated and compensated people will pay to live in a high amenity place. She found that:

. . .cities which became disproportionately productive for high skill workers attracted a larger share of skilled workers. The rise in these cities’ college shares caused increases in local productivity, boosting all workers’ wages, and improved the local amenities. The combination of desirable wage and amenity growth caused large amounts of in-migration, driving up local rents. However, low skill workers were less willing to pay the “price” of a lower real wage to live in high amenity cities, leading them to prefer more affordable, low amenity locations.

So, high skill workers are more willing to pay for amenities than low skill workers. But the Seattle metro area was in the top five in Diamond’s rankings of most desirable places for both college educated and non-college educated workers. So not only are high education/wage workers willing to pay extra to live in Seattle, so are lower education/wage workers.

The lifestyle part really matters, and is not captured in either the U.S. News or Fed rankings. This is not new. Writing in the aftermath of the Boeing Bust of 1969, author Gerald Nelson observed that

“Many of those who cling to Seattle, middle class, fired and broke, do so not out of masochism but because they love it. They want the mountains, the lakes, the Sound. They want the peace that the last remnants of the land can offer even the penniless.”

Come for the job, stay for the lifestyle.

But what if the job and the lifestyle can be uncoupled? Maybe, with the new acceptance of remote work, potential newcomers can snag the good job in Seattle, but never actually move to the expensive, crowded metro area. The Indexer has speculated on this. The scale and persistence of remote work is the overriding question of this moment for urban geographers. The conventional wisdom is that remote work is here to stay, but here are a couple of counterarguments.

The Scrum: firms will decide that physical proximity really matters

Since the dawn of the industrial revolution, firms have clustered together by industry: steel in Pittsburgh, finance in New York, entertainment in Los Angeles, energy in Houston, IT in Silicon Valley. The logic of agglomeration economics—clustering of similar firms increases the odds of knowledge spillovers, innovation and employment matches—has not gone away.

While many may find short term lifestyle and productivity benefits from working at home, firms may find medium and long-term downsides from a lack of personal interaction. The whole point of agglomeration is to embrace spontaneity: the chance encounter at the coffee bar, the glance at something on a colleague’s desk, the hallway chat. These cannot be planned into a twice-a-week visit to the office. Joseph Schumpeter famously declared that with clustering, industry knowledge is “in the air.” It is not clear that the air can be shared over Zoom.

Office politics: proximity affects relationships

Telecommuting has been possible for decades, but was held back, in part, by the sense that not being in the office would inhibit one’s career progression. “Face time” originally meant just that: hanging with the boss. This imperative went away during the pandemic, and the norms of office politics shifted. But is that a permanent shift or will we see a reversion to old office culture, with physical presence again becoming critical to career advancement? Will a willingness to commute to the head shed signal a greater commitment to the firm and will remote workers seem less loyal?

Finally, a word about weather

For the past 100 years, as economies have become detached from natural resources and waterways, Americans and their employers have been moving steadily toward places with nicer weather. The introduction of air conditioning, which makes good winter locations bearable in the summer, accelerated this trend. It turns out that, notwithstanding these glorious August days, the weather in Western Washington is likely inhibiting growth. Federal Reserve economist Jordan Rappaport estimated the impact of weather on migration to counties across the country. Figure 3 shows his findings. The lightest colored counties (including all of Western Washington) are the places where weather most likely discourages migration.

In Rappaport’s methodology, the number of rainy days lowers the score quite a bit. The paper specifically notes the poor score that King County gets for weather as a determinant of migration. We can only conclude that, if the region gets high overall marks for amenities, as per Diamond’s research, and weather is a significant dis-amenity, then the other stuff must be awfully good.

This raises the interesting question of Western Washington’s role in attracting “climate refugees” moving from places that become intolerably hot. Some projections for the impact of climate change on the Northwest indicate that it will get rainier, which would tend to make it less attractive despite its milder temperatures. Air conditioning may mitigate the heat problem, but there is not much one can do about rain and gloom.

Looking Ahead

To repeat, with so many new and confounding variables in play, forecasting migration patterns is a fool’s errand at this point. But at the same time, we do need to recognize that strong patterns of in-migration to Washington and the Seattle area have been the norm for 169 years. People come here in large numbers for some combination of opportunity and lifestyle, with the flow only occasionally interrupted by the severe economic shocks that the region is prone to.

So maybe the pertinent question is, what would make people stop coming here? The embedded mass of talent and future-oriented business suggest the economy will be strong for some time to come. The most likely force to slow migration will be the high cost of housing: eventually, the willingness to pay extra for a high amenity lifestyle will hit a wall. This is not a difficult problem to solve technically, but a difficult one to solve politically. The future of in-migration will depend on policy choices.

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